Daily Market View 20-05-2026

Written by David Stritch | May 20, 2026 9:01:04 AM

UK inflation falls to 2025 low, but not as it seems

GBP -

As strange as it sounds, UK inflation really has fallen and not only fallen, but fallen to its lowest since March 2025. While US inflation has rocketed to its highest since June of 2023 and Eurozone inflation tips over 3%, the UK has proven an outlier in its resilience against such a shock.

Ofgem makes sure that these things don't hit the system all at once nor too hard, moreover, May's weather has hitherto proved mild but no cold snap, further shielding home costs.

Above shows the actual breakdown, with the large yellow band on March representing the initial impact of higher Oil prices, before the base effect of comparing with high prices from March of 2025 leaves the data.

We would almost certainly have seen a decrease in energy prices overall if not for the Iran war. Practically, today's figures combined with yesterday's increase in unemployment suggests that the Bank of England may not need to hike rates as aggressively as first anticipated, which is bad news for the Pound.

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